James Murdoch has stepped down as chairman of British Sky Broadcasting (BSkyB) in a bid to protect the company from being damaged by the News Corp phone-hacking scandal.

The resignation comes just over a month after Mr Murdoch stepped down as executive chairman of News Corp's British newspaper arm News International.

The 39-year-old says he is stepping down in the best interests of the satellite broadcaster, so further criticism of him does not hurt the brand or its shareholders.

"I am aware that my role as chairman could become a lightning rod for BSkyB and I believe that my resignation will help to ensure that there is no false conflation with events at a separate organisation," he said.

"As attention continues to be paid to past events at News International, I am determined that the interests of BSkyB should not be undermined by matters outside the scope of this company," Mr Murdoch wrote in a letter to the BSkyB board.

The youngest son of Rupert Murdoch had long held off the demands for him to step down at BSkyB, where he oversaw an expansion of the business during his four years as chief executive.

But James Murdoch has been under sustained pressure over British tabloid News of the World's phone hacking scandal and just how much he knew about it.

There are certainly several events about to occur. One of them is he'll appear before the Leveson inquiry, the hacking inquiry - that may be embarrassing for him, for the company. The Culture Committee, which he did give evidence before, that's due to give its report in the next few weeks and that may have some adverse findings as well. Plus today the board may take onboard two members that may not be sympathetic to him.

So far the board of BSkyB have backed him all the way, but that doesn't reflect all the sentiment amongst the shareholders ... some of the private shareholders have been critical of him and have wanted him to go.

Europe correspondent Philip Williams

He and his father are due to be questioned at the Leveson parliamentary inquiry, and Britain's broadcasting regulator, Ofcom, is reviewing whether the Murdochs are "fit and proper" people to be controlling BSkyB.

"We continue to gather evidence which may assist us in assessing whether BSkyB is and remains fit and proper to continue to hold its broadcast licences," an Ofcom spokesman said.

James Murdoch has also relinquished positions at GlaxoSmithKlein and Sotheby's this year.

He arrived at News International after the phone-hacking had died down, but has been criticised for failing to uncover the scale of the wrongdoing.

He will remain on the board of BSkyB and will be replaced as chairman by Nicholas Ferguson, who was previously deputy chairman and senior non-executive director.

Hacking scandal timeline

Look back at the major events in News Corporation's phone-hacking scandal.

Investors and analysts welcomed the move, although they said they had no complaints about James Murdoch's conduct at BSkyB.

Rupert Murdoch and News Corp chief operating officer Chase Carey said they were grateful for James's leadership of BSkyB.

"He has played a major role in propelling the company into the market-leading position it enjoys today," their statement said.

A source close to the company said James would retain his position on the News Corp board, although other News Corp executives have suggested he will struggle to take over the top job, and indicated the focus could turn to his sister Elisabeth.